Medical costs vs hospital costs: Simple explainer

Published Sep 26, 2018

Taking a few minutes to understand healthcare costs will ensure peace of mind if illness strikes

When you or a family member requires medical or hospital care, the last thing you want to worry about are the bills. If this involves a private hospital stay, then you’re likely to receive a succession of bills related to both medical and hospital expenses.

It can be quite confusing to work out what gets claimed against Medicare, what gets claimed against your private health insurance , and what gets claimed against both?

Why not take a minute to review the different types of healthcare costs and assess whether you have adequate private health cover for your needs? If you do this when you’re well, it will go a long way towards delivering peace of mind in times of healthcare need.

Medical costs: what’s the deal?

When you visit a general practitioner (GP) or a medical specialist, some or all of their fees are paid by Medicare, which is funded by the Australian government.

If your doctor ‘bulk bills’, they charge Medicare directly and you won’t pay anything. If they don’t, you pay the bill and then get a portion of it reimbursed by Medicare.

You will be out of pocket if there is any ‘gap’ between the Medicare rebate and what the doctor charges. This is known as ‘medical cost’.

These services are covered under your extras cover as part of your private health insurance. Check what extras are included in your current policy, and make sure they’re up-to-date with your current needs.

Extras cover may also cover other expenses, such as pharmaceuticals which aren’t on the government’s Pharmaceutical Benefit Scheme, and ambulance fees (unless you live in Queensland or Tasmania, where ambulances are funded by the state government).

Hospital: public or private?

If you’re admitted to a public hospital as a public patient, all your costs will be covered by Medicare.

As a public patient, you don’t get to choose your own hospital or doctor and you may have to wait longer to receive treatment, depending on your healthcare needs. That’s why some people opt for treatment as a private patient – which you can choose to do either in a public or private hospital.

As a private patient, you can choose your own doctor and you may also have a say in your choice of hospital, as many doctors visit a number of different facilities.

As a private patient, you’ll be responsible for the portion of your doctors’ bills not covered by Medicare. Depending on your treatment, this may include bills from your treating doctor or surgeon, assistant surgeon, anesthetist and other providers. Your private health insurance may also contribute towards these costs, depending on your level of cover.

If you receive treatment in a private hospital, you’ll also incur costs for services like accommodation, operating theatre and intensive care fees, prostheses (such as hip implants or pacemakers), pathology, radiology and some pharmacy, these are known as ‘hospital costs’. If your health fund has an agreement with your hospital, many of these expenses are likely to be covered by your private health insurance policy, depending on your type and level of cover.

Always speak to your private health insurance fund before admission to a private hospital to check your level of cover against your doctor’s expected fees. Many people may also be required to make a small upfront payment – known as an “excess” - to the hospital on admission. Again, this will be explained to you by your private health insurance company prior to admission.

Tips for keeping health costs in check

A few simple steps can go a long way to making sure that staying healthy doesn’t cost more than it needs to.

When you take out health insurance, compare what different policies offer for both hospital and extras cover to determine what’s most suitable for your needs.

For example, if you’re young and healthy you may want extras cover for services like dental and physiotherapy, but hospital cover that only covers you for accidents.

Similarly, if you’re thinking about starting a family then look into your health insurance policy well in advance – as most have waiting periods relating to childbirth.

Review your health insurance at different life stages

It’s also a good idea to reassess your insurance needs annually. Health insurance should always be updated at different life stages and circumstances, such as when you’re:

young, healthy and active

thinking about starting a family

becoming an empty nester and entering retirement

developing more complex health needs.

These different life stages are all good opportunities to review your health insurance policy and make sure it’s keeping pace with your changing needs.

And please remember that our friendly customer service staff are always happy to assist with any questions you may have about your health insurance policy or your cover and costs related to any impending hospital visit. You can contact us on 1300 499 260.

CUA Health has been helping Australians care for their health since 1976. We’ve put over 40 years’ experience into creating health insurance that offers more to help you care for the ones you love – like value-for-money Hospital and Extras cover that’s right for you.